2007 (7) TMI 38 - HC - Income Tax

Court upholds undisclosed income treatment for bank deposits in appeal dismissal. Lack of evidence key.

The court dismissed the appeal, upholding the treatment of deposits in bank accounts of relatives as undisclosed income of the assessee. The court found ... Undisclosed income - Department contended that deposits in the name of assessee relatives and benami were undisclosed income in the hands of assessee - Held that amounts assessable in the hand of assessee Issues:1. Interpretation of Section 69 or 69 of the Income-Tax Act.2. Treatment of deposits in bank accounts belonging to relatives as undisclosed income.Analysis:Issue 1: Interpretation of Section 69 or 69 of the Income-Tax ActThe appeal under Section 260-A of the Income-Tax Act was directed against orders related to the block period of 1.4.1987 to 4.2.1998. The court examined whether Section 69 or 69 would be applicable to the case. The Tribunal divided the accounts into two groups: accounts in the names of relatives of the assessee and accounts treated as benami of the assessee. The Tribunal upheld the reasoning of the CIT (A) regarding accounts in the names of relatives. The Assessing Officer highlighted irregularities in these accounts, stating that they were conduits for encashing benami FDRs. The Assessing Officer prepared a peak chart showing peak investment in bank accounts at Rs. 22,23,036/- for the financial year 1996-97.Issue 2: Treatment of deposits in bank accounts belonging to relatives as undisclosed incomeThe Tribunal found that deposits in bank accounts of relatives were operated by the assessee, a Senior Manager at a bank, without the knowledge of the account holders. The Tribunal concluded that the deposits constituted undisclosed income of the assessee. The court noted that the relatives were unaware of the deposits or accounts opened in their names. The assessee failed to provide evidence to rebut these findings. The court held that the CIT (A) and the Tribunal were justified in treating the deposits as undisclosed income of the assessee. The court emphasized that findings were based on sufficient evidence and could not be reversed merely because another view was possible.In conclusion, the court dismissed the appeal, stating that it lacked merit. The deposits in the bank accounts of relatives were treated as undisclosed income of the assessee due to lack of evidence to the contrary. The court upheld the decisions of the lower authorities based on factual findings and evidence presented during the proceedings.